Health Protection (Coronavirus, Restrictions) (Obligations of Hospitality Undertakings) (England) Regulations 2020

Baroness Donaghy Excerpts

Friday 9th October 2020 Lords Chamber

[Baroness Donaghy (Lab)]

My Lords, I speak in support of my noble friend Lord Stevenson of Balmacara. If the restrictions do not make sense, people will not follow them. The first time round they accepted them, as the noble Baroness, Lady Walmsley, said, because there was some trust that the Government knew what they were doing and that we would have a test and trace system second to none. We now realise that the Government are flip-flopping around on their policy and have a test and trace system that is the subject of a minefield of jokes.

The noble Lord talked about robust collaboration but said little about the vital importance of local government. The leaders of councils in the north have written to the Government to outline their plan, but the response has been dismissive and almost contemptuous. Why are the Government not listening to local government?

For some 16 years, I was a licensee in a students’ union, so I know a little bit about young people’s drinking habits. I appreciate that these regulations are a compromise by the Government to help the hospitality industry, but it is probably the worst of all worlds to have a 10 pm curfew. The Government have never offered a comprehensive explanation of the scientific evidence for cutting off trade at 10 pm. The noble Lord also talked about ensuring that business plays its part. The hospitality industry has played its part by ensuring social distancing and hygiene. Businesses need either to open or to be financially supported. The Government need to be clear.

Someone said on the radio this morning, “If a car drives round and round in circles, you change the driver.” That sums it up.

Trade Bill

Baroness Donaghy Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Tuesday 8th September 2020 Lords Chamber

[Baroness Donaghy (Lab) [V]]

My Lords, I congratulate the noble Lord the Minister on his maiden speech, as I do the right reverend Prelate the Bishop of Blackburn. The Minister’s presentation was a lot clearer than his Bill. I support everything that my noble friends Lord Stevenson of Balmacara and Lord Whitty said. In his opening remarks, the Minister referred to the Trade Remedies Authority and gave an assurance that it would be independent. I think that we need some guarantees about that, and I hope that the TRA will be treated better than the Competition and Markets Authority has been.

I want to concentrate on competition and state aid infrastructure. Let us look at the extraordinary history of the Government’s handling of the future responsibilities of the CMA. They moved from designating the CMA as the domestic regulator with proposals to provide additional interim financial support. Subsequently, in February 2020, that draft regulation was withdrawn and the Government now maintain that ratification of the withdrawal agreement with the EU means that a domestic regulator might not be needed at all—from winning the lottery to possible abolition. I have no idea why the chairman of the CMA, the noble Lord, Lord Tyrie, resigned, but I can take a good guess.

Despite close questioning in June from the noble Lords, Lord Turnbull and Lord Lamont, and my noble friend Lord Wood about the void in policy, the Minister, Paul Scully—same Minister; different Government—maintained that the Government were “working on options” which would be discussed with key stakeholders in due course. There was no hint that policy on the CMA would change as a result of the withdrawal Act, and I am not sure which is worse—being disingenuous or making it up as you go along.

There are complex issues around state aid, not least of which is what structure will be established for consultation with the devolved Administrations, and what strategy the Government will adopt. What is the future for the CMA? How will it tie in with the Bill? If the Government are content that the WTO rules are sufficient, how can they persuade the devolved Administrations that they will get a fair deal?

Whirlpool Tumble Dryers: Product Recall

Baroness Donaghy Excerpts

Monday 17th June 2019 Lords Chamber

[Lord Henley]

My Lords, there would be considerable difficulties in setting up such a register, but we note what the noble Lord and national fire officers have said on this matter and we will consider it. I think we have a pretty good system. We set up the OPSS in January last year. As I said, we will continue to monitor how that works and do what we can to hold manufacturers to account.

[Baroness Donaghy (Lab)]

My Lords, if the chief fire officers, the Fire Brigades Union, trading standards officers and a number of other consumer groups have all been incredibly critical of the system we have had for not just three and a half years but many more, with companies such as Whirlpool getting away with it, can we really say that the system is satisfactory? Can the Government not do a proper review and ensure that these goods are not risking lives? I am very grateful to the noble Lord, Lord Razzall, for raising the fact that a white goods issue started the Grenfell fire—that all seems to have gone rather quiet. I do not think the Government have a sense of urgency about this. In light of the comments from all those who actually know what they are talking about, who are asking for better safety regulations, the Government should sit down and do their job.

[Lord Henley]

My Lords, I reject the noble Baroness’s accusation that we are being complacent on this matter. It is not my job to defend Whirlpool and I accept that it has not been as fast as it might have been, but the Government have certainly held it to account. Whirlpool has at least got to some 50% of the tumble dryers it is looking at, which is far better than any other similar recall process; I understand that 10% to 20% is normally expected in programmes of this sort. Whirlpool has made progress, but the Government feel it can do more and that is why my honourable friend took the action she did and why we are holding it to account.

National Minimum Wage Naming Scheme

Baroness Donaghy Excerpts

Wednesday 5th June 2019 Lords Chamber

[Lord Henley]

I would not want to use the word “suspended”. My honourable friend made it clear in her Statement yesterday that naming and shaming was still there and available, but that while we were reviewing the scheme we were not using it. We want to look at the effectiveness of that scheme, as my honourable friend said, and decide how it can be made use of most effectively as one of the tools in ensuring that the minimum wage legislation, which goes back a long way—it was introduced by the party opposite, extended by the coalition Government and had further increases under the Conservative Government—all works well. It belongs to all of us.

[Baroness Donaghy (Lab)]

My Lords, the Minister has asked us to be patient. Does he have any idea at all when this review might be completed so that we can have more definite information? Having spoken recently to Sir David Metcalf, who was an original member of the Low Pay Commission—we served together 20 years ago—at the 20th anniversary of the minimum wage, I know that he is quite clearly looking at the whole range of possibilities to make sure that implementation takes place. Without wanting to sound too critical, if you divide £24.4 million of arrears among 220,000 UK workers, if my maths is right that is about £110.90 each. I accept that that is a lot for people on minimum wage, but implementing the whole area is more important than worrying about this one issue. I hope that we get some very speedy action on the whole range of implementation of underpayment, rather than just the naming and shaming issue.

Fuel Poverty

Baroness Donaghy Excerpts

Thursday 4th April 2019 Lords Chamber

Asked by

[Baroness Donaghy]

To ask Her Majesty’s Government what is their estimate of the number of households in fuel poverty; and what action they intend to take to reduce that number.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)]

My Lords, in 2016, 2.55 million households in England were in fuel poverty. We can measure progress using the total fuel poverty gap—that is, the reduction in bills required for all fuel-poor households to heat their home at a reasonable cost, which has decreased by £25 million since 2010. The best long-term solution to tackle fuel poverty is to improve energy efficiency, which we have made the primary focus of our energy company obligation.

[Baroness Donaghy (Lab)]

I thank the Minister for his Answer. I hope he agrees that we have not cracked this problem yet. The official figures are the tip of the iceberg. Since I last asked this Question, things have become worse, with fuel price hikes and a massive rise in the private rented sector, where fuel poverty is at its worst. The Government’s plan for insulating and upgrading homes is 60 to 80 years behind target. What practical steps will the Government take to solve this Victorian problem before we get to the 22nd century?

Employment Rights (Miscellaneous Amendments) Regulations 2019

Baroness Donaghy Excerpts

Thursday 28th March 2019 Lords Chamber

The Government’s good work agenda is, I recognise, a modest step in seeking to do that. These changes are certainly a step in the right direction but no substitute for participation in the European social and legal programmes. I hope that the Government will commit, when and if we leave the EU, to keep our rights in alignment with developments there. Much remains to be done.

[Baroness Donaghy (Lab)]

My Lords, I will be very brief. I want to raise three points. The Minister mentioned in his opening remarks that this was the most significant set of changes in employment relations in 20 years. I am quite happy for him to exercise that kind of poetic licence but there will be something really worth celebrating on Monday, because that is the 20th anniversary of the introduction of the statutory national minimum wage. To compare these regulations with that sort of development is, as I say, poetic licence but let us be generous on the last day of the week.

My second point is that when I worked at ACAS, which is of course now quite a long time ago, the helpline used to receive calls which were mainly from employees but also from employers. They showed a very different picture in the real world from what regulations and the law said. I still think that the situation has deteriorated, if anything, simply because—as my noble friend Lord Monks said, and I agreed with his every word—it is sometimes a very different picture on the ground and people are grateful for the small mercies they get. We need to remind ourselves that any change in regulation has to be monitored and any fines implemented. The picture of a whole generation of younger people with very little expectation of a permanent contract, an occupational pension or real maternity leave rights—given the extent to which women are sacked because they apply for it, even though we know that is illegal—is such that if the Government mean business, they will have to take seriously how they promote the existing law and ensure that it is enforced.

That brings me on to my point about employment tribunals and fines. One of the biggest problems was that the employers did not pay the fines, so it is all very well increasing the amount but it would be useful to know from the Minister what the situation is now. What is the proportion of employers who refuse to pay the awards made by the tribunals?

Finally, I accept that a very good step forward has been made regarding written statements, which was one of the biggest issues on the ACAS helpline. People were not being given their statements or, as my noble friend Lord Monks said, they were fed in dribs and drabs so that they would not have a complete picture. For example, an important reference to their rights would consist of, “Please look up the employer’s website”. That is an extremely important move and it would be useful if we could monitor what improvements are made as a direct result of this statutory instrument.

[Baroness Drake (Lab)]

My Lords, I too welcome the strengthening of workers’ rights contained in these regulations as a work in progress that begins to address—to use the Government’s words in their own Good Work Plan—the fact that,

“some businesses have transferred too much business risk to the individual, sometimes at the detriment of their financial security and personal wellbeing”.

These regulations, however, are introduced in the context of concerns about the consequences of the UK’s departure from the European Union, when workers will no longer have access to the enforcement mechanisms and decisions that they currently enjoy. Nor will they benefit from future decisions of the Court of Justice of the European Union or from ensuring that UK workers will not fall behind in the development of rights in the EU.

Yes, these regulations will increase the maximum penalty from £5,000 to £20,000 where there has been an aggravated breach of a worker’s employee rights, to act as both punishment and deterrent for poor employer behaviour, although that penalty is capped at 50% of any compensation award. But enhanced rights, as captured in these regulations, will be of limited value if workers do not have access to justice when they are breached. If workers cannot enforce their rights, they are rendered meaningless.

We saw a staggering fall of 70% in the number claims brought to employment tribunals when fees were introduced and a disproportionate impact of that fell on women, particularly low-paid and pregnant women. The Government have not ruled out the reintroduction of fees, observing only that there will be a consultation exercise if they are reintroduced. UNISON’s legal challenge to their original introduction resulted in the Supreme Court ruling that the Government had acted unlawfully. Reintroducing fees would undermine again the reforms set out in these regulations. Can the Minister update us on the Government’s current intentions with regard to tribunal fees?

The Government recognised the scale of non-compliance with basic employment rights in their own Statement on the Good Work Plan, when they referred to the Government considering,

“the case for creating a new single labour market enforcement agency”.—[Official Report, Commons, 17/12/18; col. 573.]

Again, can the Minister update us as to the current state of the Government’s thinking on such an agency?

These regulations, while welcome, are not sufficient to tackle the insecurity that many workers face through less job security, the decline in the quality of the employment contract and volatility of earnings. The Government frequently refer to the headline increase in the numbers in employment, but refer less to the changing pattern of employment growth underlying that headline—for example, the distinction between employee and non-employee workers, with the latter missing out on key employment protections applying to employees. Workers who are non-employees are entitled only to a lower tier of employment rights which excludes protection against unfair dismissal, entitlement to statutory redundancy pay or minimum periods of notice on dismissal. They have far less security.

The Labour Force Survey, which the impact assessment relies on to reference atypical work, does not explicitly collect data on the issue of employee and non-employee workers. The Government admit in the impact assessment that they have not established robust figures for the number of workers with the less secure status of non-employee worker.

We have also seen an increase in self-employment, particularly lower-paid self- employment, which now accounts for more than 15% of the labour force, and a rise in the number of zero-hours contracts and other characteristics of the gig economy. Only a minority of the net new jobs created over the recent three-month period measured—November to January—were more traditional, full-time jobs; the others included mostly part-time jobs and full and part-time self-employment.

More than 60% of private sector workers in the UK now work for SMEs, with some 12 million working for small employers. A recent report from the Resolution Foundation revealed the extent of volatility of earnings experienced by workers in today’s world, impacting both low and middle-income earners and challenging the assumption of the steady monthly wage. Two in five workers experience persistent volatility, with significant changes in monthly pay at least six times a year. Of course, extending the right to a written statement of terms and conditions of employment to all workers is very welcome, but those statements will not be sufficient to address the transfer of too much business risk to the individual, to their detriment, when the underlying rights and security remain weak. Much more needs to be done to adapt to the realities of a changing UK labour market.

National Minimum Wage (Amendment) Regulations 2019

Baroness Donaghy Excerpts

Monday 4th March 2019 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)]

My Lords, the regulations were laid before the House on 28 January 2019. Their purpose is to increase the national living wage and all the national minimum wage rates from 1 April 2019. The regulations also include an increase in the accommodation offset rate, which is the only benefit in kind that counts towards minimum wage pay.

The national living wage has had a positive impact on the earnings of the lowest-paid. Between April 2015 and April 2018, those at the fifth percentile of the earnings distribution saw their wages grow by almost 8% above inflation. That is faster than at any other point in the earnings distribution.

The labour market has continued to perform well. The employment rate is at a record high of 75.8% and the unemployment rate is at 4%, the lowest since the 1970s. Increasing the minimum wage is one more way in which the Government’s industrial strategy is boosting people’s earnings power and seeking to raise productivity throughout the UK.

From April, the national living wage for those aged 25 and over will increase by 38p to £8.21, which is a 4.9% increase. The 38p increase in April will mean that a full-time worker on the national living wage will see their pay increase by more than £690 over the year. The national living wage is on course to reach the Government’s target of 60% of median earnings in 2020. The annual earnings of a full-time minimum wage worker will have increased by more than £2,750 since the introduction of the national living wage in April 2016.

The 21 to 24 year-old rate will increase by 32p, meaning that those in that age group will be entitled to a minimum of £7.70, an annual increase of 4.3%. Those aged between 18 and 20 will be entitled to a minimum of £6.15, an annual increase of 4.2%. Those aged 16 and 17 will be entitled to a minimum of £4.35, an annual increase of 3.6%. Finally, apprentices aged under 19, or those aged 19 and over in the first year of their apprenticeship, will be entitled to £3.90. This is a 5.4% increase and is the largest increase of all the rates that we are debating today. All these above-inflation increases represent real pay rises for the lowest-paid workers in the UK.

The Government’s green-rated impact assessment estimates that more than 2.1 million people will benefit directly from the regulations. All the rates in the regulations have been recommended by the independent and expert Low Pay Commission. The LPC brings together employer and worker representatives to reach a consensus when making its recommendations. The Government asked the Low Pay Commission to recommend the rate of the national living wage such that it reaches 60% of median earnings in 2020, subject to sustained economic growth.

For the national minimum wage, the LPC has recommended rates that increase the earnings of the lowest-paid young workers without damaging their employment prospects by setting it too high. I thank the LPC for the extensive research and consultation that has informed these rates recommendations, all of which is set out in its 2018 report published in November. At Budget 2019, the Chancellor will announce the LPC’s remit in the years after 2020. The Government have an aspiration to end low pay. This year, we will engage with the LPC, workers and businesses to balance this ambition with the need to protect employment for lower-paid workers.

The Government recognise that as the minimum wage rises, there is a higher risk of non-compliance as a larger share of the workforce is covered by the minimum wage. The Government are committed to cracking down on employers who fail to pay the national minimum wage, and we are clear that anyone entitled to be paid the minimum wage should receive it. Consequently, the Department for Business, Energy and Industrial Strategy has almost doubled the budget for enforcing the national minimum wage and national living wage. Funding reached £26.3 million this year, up from £13.2 million in 2015-16.

HMRC follows up on every complaint it receives, even those which are anonymous; these include those made to the ACAS helpline, via the online complaint form or from other sources. Increasing the budget allows HMRC to focus on tackling the most serious cases of wilful non-compliance. It also increases the number of compliance officers available to investigate national minimum wage complaints and conduct risk-based enforcement in sectors where non-compliance is most likely. In 2017-18, HMRC recovered pay arrears in excess of £15.6 million for over 200,000 workers.

Sustainable increases in minimum wage rates depend on strong economic fundamentals—and those of the UK are strong. The economy has now grown for 24 quarters in a row—the longest streak in the G7. Evidence has also long told us that investment in human capital is crucial for the long-term productivity of the workforce. The industrial strategy sets out our long-term vision for increasing productivity, including through raising the minimum wage, and so boosting the earnings power of the lowest-paid workers. Through these regulations, the Government are building an economy that works for everyone. I commend them to the Committee and I beg to move.

[Baroness Donaghy (Lab)]

My Lords, I welcome this statutory instrument and the increases outlined by the Minister. As he knows, next month will be the 20th anniversary of the introduction of the national minimum wage, and I had the honour of being one of the founding members of the Low Pay Commission at the time. The recommendations we made impacted on and benefited 1 million women—and, incidentally, the world did not come to an end, which some forecasts had said would happen.

I am pleased that successive Governments have upheld the principles laid down by the original committee, and I hope that that will continue. Obviously, this was before the national living wage was introduced. However, one omission from our very first report in 1998, before the implementation, was the issue of accommodation offset. We were asked as a committee to look at that again, because we had not seen the significance of it.

I well remember being taken with the committee down to a convent in the middle of the Devon countryside to be gently lobbied by the Mother Superior and a number of nuns about the importance of having an accommodation offset. The Minister will know that it might have been gentle lobbying, but, my goodness, we were in absolutely no doubt whatever about the strength of feeling involved. The experience we had on the committee is a memory I will take with me for a long time. We were conscious that we were creating history, and I am very glad indeed that this is still here for us to admire.

[Baroness Burt of Solihull (LD)]

My Lords, I will fulfil the promise I made to the Minister on the previous statutory instrument and be brief. It is also a great relief from Brexit to be discussing something that is current and not contingent on anything else happening.

The statutory instrument talks about the national minimum wage amendment regulations, but the table refers to the national living wage. It does not take much to confuse me. I just want to explore that difference for a minute or two. The uplift of 4.9% for over-25s to £8.21 is very welcome and I accept and welcome the comments from the Minister on the progress that the Government are making to get to 60% of median earnings by 2020.

The concept of the national living wage was introduced by the Government in 2015. I appreciate the Minister’s comments on how the amount has increased but my understanding is that it is not a national living wage because it is not based on actual living costs. The Living Wage Foundation currently calculates it—although presumably it is due for an uplift as well—at £9 per hour and £10.55 in London. It says that the living wage is what people need to earn to live. Citizens UK says that there is a moral imperative on employers to pay that if they can and 4,700 businesses and 104 local authorities do.

We know that 20% of all low-paid workers are in the public sector. Can the Minister say what percentage of public sector workers are in receipt of the living wage? It was very good to hear the Minister’s comments on enforcement. Can he tell me how many companies have been found to be paying below the minimum wage and how many of these have actually been prosecuted?

In conclusion, I hope that we will be moving towards the living wage very soon. It is proven to be good for business because it improves staff morale and retention. It is good for society and for the Government’s coffers too, because 35% of those earnings will go to the Treasury.

Product Safety and Metrology etc. (Amendment etc.) (EU Exit) Regulations 2019

Baroness Donaghy Excerpts

Monday 4th March 2019 Grand Committee

[Baroness McIntosh of Pickering (Con)]

My Lords, I am delighted to follow the noble Baroness, because we overlapped for at least five years as Members of the European Parliament. The noble Baroness referred to cosmetics; I think we will both remember the fevered exchange we had with constituents on animal testing. I echo her remarks.

I am sure my noble friend will be only too aware of the criticism that has been levelled at his department, and I feel for him most deeply, because this epic package is the surest cure for insomnia that any Minister could wish for. Could he put our minds at rest, and those of the members of the sub-committee? I am mindful of the problems we have already heard: this instrument had to be reissued because there were minor drafting errors in the original script, plus the fact that the impact assessment was published subsequently, which meant that the scrutiny committee was not able to perform its function because it did not have that document in front of it.

I do not detract from the fact that this is a very necessary piece of legislation, but I hope that this will not be the way forward. There will be instances where regulations fall naturally together, but the very number of pages here, and the fact that this has had to be repeated and that the impact assessment could not be packaged together with it, must surely be a cause of concern for the department. I do not want to go down this path again.

I have a number of questions. The sub-committee noted that there is considerable uncertainty, for reasons that have been well rehearsed, about the possible impact on UK consumers and businesses of leaving the EU’s product safety regime. Does the Minister share the concern of the scrutiny committee’s Sub-Committee B about the impact that the loss of access to EU product safety databases could have on UK consumers? Even at this late date, might the department be able to provide that information in writing to the committee before the SI transfers from here to the Chamber? That concerns me, given that it relates to offshore installations, other major industries and explosives as well.

I want to share one anecdote with my noble friend. In a previous ministry—it was the Department of Trade and Industry, under a Conservative Government, I think—it was decreed that second-hand toys could no longer be sold in charity shops because of the danger that the eyes and other pieces might be displaced and be a great safety risk to small children. What I was not prepared for was the amount of correspondence—in those days, they were hard-copy letters; people printed out a standard letter and we received multiples of it because we had thousands of constituents. That was an unintended consequence of the toy safety directive as it was implemented in UK law at that time. One might say that it was gold-plating, so it would be nice to know that nothing is being gold-plated here and that we are just transferring what is already in UK law. If my understanding is correct and we lose access to EU product safety databases, it must surely set alarm bells ringing.

With so many regulations or schedules to regulations bundled together here—and following on from what was itemised by the noble Baroness, Lady Crawley—is my noble friend convinced that we are not missing a matter of public policy here? This is our one opportunity to discuss it before we pass the regulations in the Committee and subsequently in the House.

[Baroness Donaghy (Lab)]

My Lords, I am a member of the statutory instruments Sub-Committee B, along with my noble friend Lord Rooker, who is in his place. I want first to thank the Minister for arranging the briefing meeting that took place last week. It is quite an unusual event for a full-scale briefing invitation to go to all Peers. I think it was at the request of the sub-committee, but it is recognition that this is quite an unusual statutory instrument.

I shall not go over the points raised about the sub-committee’s comments. My only question is in reference to the Health and Safety Executive, which is referred to in paragraph 10.2 of the Explanatory Memorandum as one of the organisations that has given technical input. I commented at the briefing and repeat today that this is not the first statutory instrument for which extra resources will be required by the Health and Safety Executive. It should be noted officially that it will be under some strain in completing its responsibilities in this area, particularly as I understand that it has been without a chief executive for at least six months. Can the Minister assure us that some inquiries will be made about why that is and that somebody will be in post as soon as possible?

Brexit: Competition and State Aid (EUC Report)

Baroness Donaghy Excerpts

Thursday 24th May 2018 Lords Chamber

[Baroness Donaghy (Lab)]

My Lords, I thank my noble friend Lord Whitty for introducing this debate and for steering us through a subject which is a potential minefield. If you can achieve a unanimous report with such a variation of political views as those held by me and by the noble Baroness, Lady Noakes, you are indeed a master of the universe—either that or one of us was asleep on the job. I accepted that we were looking at a snapshot of what we do now and what we need in the immediate post-Brexit future, and that debating the wider public interest effects was for another day.

Dr Michael Grenfell from the Competition and Markets Authority referred to,

“a challenge to the ‘market competition’ consensus that has prevailed in policy-making, at least in the advanced industrialised world, for the past three decades”.

He acknowledged that,

“the coming years may well see changes to competition policy to reflect these wider public concerns and policy trends”.

He was referring not just to the EU referendum but to the election of Donald Trump and the rise of populist parties, both left and right, in countries across Europe and to what commentators had called “an expression of the public mood”.

However, frustrating as it might have been, the committee concentrated on the job at hand, which was about the immediate future. What was remarkable about the evidence that we took was that nearly everyone said the same thing. One can draw one of two conclusions from that: either the existing system is working well or the witnesses believe that maintaining tight control over the current system is preferable to any alternative. Those who want a more buccaneering approach to trade and mergers will be disappointed by the report, and those who do not believe that the system works well for consumers and who believe that greater use of the existing state aid provisions would be welcomed will also be disappointed. Therefore, it could be argued that the report is about right because it disappoints everyone except the CMA.

The report might seem dry and boring on the surface but it is the thin crust covering a maelstrom of political debate about ownership and control, and about appropriate assistance for the regions. In my view, successive Governments have not maximised their ability to use state aid for important social measures. According to two legal experts in EU state aid law, the UK would have to triple the amount that it spends on state aid to match the proportion of GDP spent by Germany. In 2015, the UK spent 0.35% of GDP on state aid schemes, excluding railways, France spent 0.62% and Germany 1.22%. The Italians and the Germans subsidise their steel industries but, somehow, the rules did not apply to the UK to do the same for Redcar steelworks. Conversely, there are over 800 companies with state ownership in the EU—one of which will be printing our passports soon.

It is clear, therefore, that the so-called liberalisation of the market has been the policy of successive Governments, which probably explains why state aid in the UK has been pushed into the sidings. I question whether the existing set-up protects the consumer: no consumer choice in the water industry; Hobson’s choice in the energy so-called market; and unacceptable quality of broadband coverage in significant parts of the country. Perhaps market power has taken over from competition. A Financial Times article pointed out that lack of competition in banking cost customers £6 billion a year, or £116 each, according to a competition inquiry in 2016. In the energy so-called market, another inquiry found that we are paying £1.7 billion too much every year. The Financial Times wrote:

“Despite official investigations galore, neither has been addressed”.


I will now turn to the government response and select a few issues. The government response makes it clear that the CMA will receive additional funding as our report indicated and has concluded that it will take on the new role as the UK state aid regulator—another area of concern in our report. I think the Government are seized of all the issues and are giving a priority to this in negotiations. The Minister reiterated the Prime Minister’s statement that:

“As with any trade agreement, we must accept the need for binding commitments—for example, we may choose to commit some areas of regulations like State aid and competition to remaining in step with the EU’s”.


That is a significant statement. The Government have also confirmed that existing state aid rules will continue to apply during the implementation period and that they do not plan to make fundamental changes to the UK competition framework, as has already been said.

In response to our comment about delays in bureaucracy in the EU state aid approval process, the Minister simply said that aid givers are always advised to take advantage of the pre-notification procedures to engage in constructive conversations with the European Commission as early as possible. So no government help there then.

On our comment about consumer concerns regarding pricing and dominance in some markets, the Government announced that they would be issuing a consumer Green Paper. I will be asking the Minister a question on that later.

My noble friend Lord Whitty has already covered the issue of having regard to EU law and precedent. Briefly, on our request for clarification, the Minister welcomed our arguments and then said that the Government will,

“take account of the views in the Committee’s account”.

I think that is what is known as a delphic comment.

The Government have accepted the importance of information sharing in merger cases, and this will form part of their negotiations. It refers to businesses agreeing confidentiality waivers to allow confidential information to be shared between enforcement agencies.

Our request that the Government should take account of the future of specialist legal services in the UK in recommendation 5 has been answered with a polite brush-off.

Our report refers to the opportunities for the UK to develop a more effective competition enforcement regime. The Government have responded that they are already taking steps under their industrial strategy, including publishing a review of the existing competition regime by April 2019 to make sure it is working as effectively as it can and publishing a consumer Green Paper that tackles markets that are not working well for consumers and businesses. What form will the review of the existing competition regime take? Will the views of stakeholders be sought and taken into account or will the CMA be marking its own homework? Secondly, when can we expect the consumer Green Paper and how will it interact with the Domestic Gas and Electricity (Tariff Cap) Bill which has just had its Second Reading?

On local government and the devolved Administrations, the Local Government Association, while recognising that its primary function is not to be a vehicle for state aid, submitted that leaving the EU could provide an opportunity to reform the state aid process, simplifying it and introducing greater local flexibilities for councils—for instance, to support smaller-scale local authority activities which deliver public benefits but not unduly distorting competition. The LGA also supports the development of a UK regional aid policy aligned with the industrial strategy. This would provide local government and its partners with the flexibility to tailor interventions and investment to best support local growth.

The Government noted the concerns expressed and,

“shares the ambition to see a UK State aid regime operate as effectively as possible”.

The only solution was to transpose the general block exemptions regulations into UK law, a cautious and predictable response but disappointing for local government.

The devolved Administrations are a key area to resolve. The institutions surrounding them did not exist when we entered the EC and this will present us with a new way of working on these issues.

Product Safety: Freezers and Refrigerators

Baroness Donaghy Excerpts

Tuesday 8th May 2018 Lords Chamber

Asked by

[Baroness Donaghy]

To ask Her Majesty’s Government what plans they have to strengthen legal safety requirements for fridges and freezers sold in the United Kingdom.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)]

My Lords, we believe that Britain’s product safety requirements are among the strongest in the world. Manufacturers have a legal responsibility to place safe products on the market. The UK is leading on proposals to enhance the standard for fridges and freezers at an international level.

[Baroness Donaghy (Lab)]

My Lords, the recent Which? report said that current safety standards are not fit for purpose and that its tests have resulted in “Don’t buy” recommendations for 250 models, most of them from household names accounting for 45% of the market. In particular, Which? advised not buying plastic-backed models. While we await the appropriate report on the Grenfell Tower blaze, what actions will the Government take to reassure consumers and support the findings of the Which? report?

[Lord Henley]

My Lords, I am of course aware of the Which? report. It made it quite clear that most or all of the fridge freezers it referred to did meet existing standards. The Which? report was looking at enhanced standards. The Government will certainly look at that and are working with Which? and other parties. This is why I stressed in my opening Answer that seeing whether even more stringent standards can be set has to be done internationally. But those products certainly meet existing standards—which, as I said in my original Answer, are among the safest in the world.